Retrospective omission of Rule 95A led to quashing of GST refund rejection and restoration for reconsideration.

Refund claims under GST were rejected on the basis of Rule 95A of the CGST Rules and the governing circular, but the rule was later omitted retrospectively from 01.07.2019 and the circular was withdrawn pursuant to the Council's recommendation. In light of that change, the Karnataka HC quashed the impugned refund rejection and appellate orders and restored the proceedings for reconsideration. The Court left all contentions open, including the issue of reversal of input tax credit, and did not determine the merits of the refund claim.

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Issues: Whether the orders rejecting refund claims and the appellate order could be quashed and the proceedings restored for reconsideration in view of the retrospective omission of Rule 95A of the Central Goods and Services Tax Rules, 2017 and withdrawal of Circular No. 106/25/2019-GST dated 29.06.2019.

Analysis: The refund claims had been rejected on the basis of Rule 95A and the circular governing the subject. During the pendency of the petitions, Rule 95A was omitted retrospectively with effect from 01.07.2019 and the circular was withdrawn pursuant to the Council's recommendation. The respondent did not dispute the premise on which refund was sought and left other questions open, including the claim for reversal of input tax credit.

Conclusion: The impugned orders were quashed and the proceedings were restored for reconsideration, with all contentions left open.

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